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Actual versus affordable prices

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Joined: 14 Jul 2005
Posts: 1826
Location: Greater Boston

PostPosted: Tue Jul 19, 2005 11:45 pm GMT    Post subject: Actual versus affordable prices Reply with quote

I found the chart below that graphs actual versus affordable prices for a broad range of locations across the US, but I decided it would be too confusing to post on the main page. It contains a regression line which I was afraid people might confuse with the cutoff line between affordable and unaffordable. It's not - in fact, most of the points on the graph are above where the affordability line would be, if it were to be drawn. Nevertheless, it is a great piece of work which is very insightful once that confusion is cleared up:

You can create your own affordability line by drawing a straight line between the bottom left corner and the top right corner. As you can see, most locations are overpriced and the high priced areas are particularly skewed. For reference, Boston is the point which has an actual price of $365,500 compared to what would be affordable at $294,900 for an overvaluation of 24%. These numbers are from Q4 2004 and appeared in the following Consumer Reports article, which is also linked to from the main page:

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